Big-budget titles: A game of risk

When I was playing "zombie" post-apocalyptic game The Last Of Us, I couldn't help but marvel at its attention to little details.

Seemingly-insignificant alleyways and abandoned homes had clutter so elaborate and believable, I sometimes wondered why the game artists bothered.

It also made me worry about the kind of money that went into making the Sony PlayStation 3 (PS3) exclusive, despite how great it is in its storytelling and immersive gameplay.

Clearly, Sony's The Last Of Us - set in a world ravaged by a fungal infection that turns people all zombie-like - is a big-budget AAA title. But, even if it sold millions of copies, would its costs be so incredibly high that it still wouldn't make money?

Will game companies close because they get overwhelmed by such huge costs and big-budget titles become a thing of the past?

Let's look back to late March, when Final Fantasy-maker Square Enix said the latest Tomb Raider sold 3.4 million units globally in four weeks post-launch.

That's a huge number, but the company went on to say that the game didn't meet sales expectations. It was thinking more in the vein of five million to six million in sales, reported Eurogamer.

What happened? Shouldn't 3.4 million copies mean S$170 million in sales, if each game sold for about S$50 in Singapore?

While the budget for the Tomb Raider reboot is unclear, Mr Allan Simonsen, coordinator of the International Game Developers Association's Singapore chapter, told me that AAA games can cost US$15 million (S$19 million) to US$50 million to make.

Some AAA titles have budgets like those of Hollywood films.

First-person shooter Call Of Duty: Modern Warfare 2 cost US$40-50 million to produce and had an estimated US$200 million launch budget, including marketing costs, the Los Angeles Times said in 2009.

That's certainly steep, but Modern Warfare 2's sales within five days of launch was US$550 million. And, within two months, publisher Activision estimated sales to have hit US$1 billion.

This compares with that of The Avengers movie, which grossed over US$1.5 billion globally after being launched in May last year, according to Box Office Mojo.

The film's production budget was US$220 million, by the way.

I can sort of understand the fixation with big-budget games by game companies when they can mean big business. But, for the cash registers to chime happily, they need to sell a lot of games.

Here's a problem: Sometimes, games just don't sell well enough.

On the latest Tomb Raider and other Square Enix games that missed their sales mark, veteran video-game analyst Billy Pidgeon told GamesIndustry International that, "for games with development budgets approaching US$100 million to be truly profitable, ratings have to be above 8.5 (out of 10) and sales need to be in the five million to 10 million unit range".

Tomb Raider scored on the ratings front, but not in sales.

Mr Simonsen said missing the sales target for Tomb Raider could mean the game didn't make enough "to cover the flops of other games" from the company (remember Final Fantasy XIV?).

He said a number of firms have been focusing on such big-budget games, which increases their risks, as the number of games made falls but the investments in them rise. "One or two bad games could be the end of the company," he said.

And, with the next-generation PS4 and Xbox One to be launched at year's end overseas, there is concern that game budgets could rise further. Mr Simonsen said game costs for current-gen consoles could be double those of the previous ones.

But he doesn't think that to be the case for next-gen consoles, as they aren't too different from the PS3 and Xbox 360 now.

As for The Last Of Us, Mr Simonsen believes its production costs could be at the high end of the US$15-50 million range.

Sony declined to reveal the title's budget, but it said last week the game's global sales of over 3.4 million units in less than three weeks post-launch "surpassed all sales expectations".

Still, Mr Simonsen noted that The Last Of Us is a PS3 showcase title and advertising costs for it could be doubling up as advertising for the game console, too.

The bottom line? If game companies want to be extravagant with their titles, costs could be reduced by simultaneously promoting it with another brand.

It's also probably not a good idea to focus on big-budget games without other income streams. And, frankly, do we really need so many big-budget games that break the bank?

The Last Of Us is selling for $69.90 at major game stores.